MKTG 361 Final Exam

Real/Animated Product Symbols

creates a character that represents the product in advertisements, such as the Energizer Bunny or Starkist's Charlie the Tuna, GEICO's suave gecko and disgruntled cavemen became cult classics for the insurance company

Which of the following is NOT a type of PR tool? a. a press conference b. a film distributed to broadcast station in hopes that they play it c. an event sponsorship d. a direct mailing of a product brochure e. a letter to the local newspaper showcasing a company charitable event

d. a direct mailing of a product brochure

Media Vehicle: Magazines

- another traditional medium that has been successful - the cost per contact in magazine advertising is usually high - the cost per potential customer may be much lower - targeted to specialized audiences and thus reach more potential customers Advantages: good reproduction, especially for color; demographic selectivity; local market selectivity; relatively long advertising life; high pass along rate Disadvantages: long term advertiser commitments ; slow audience buildup; limited demonstration capabilities; lack of urgency; long lead time

R+D/Product Development

- basic form - test market (expensive) - determining 4P's, STP, promotion

Intro Stage

- basic product - promotion: building awareness, entice trial - price: ?, no rule of setting price, depends on product - place: selective - the full-scale launch of a new product into the marketplace

Product Development Process Step 3: Business Analysis

- breaking ideas into pros/cons - preliminary figures for demand, cost, sales, and profitability are calculated

Mood or Image

- builds a mood or image around the product or service, such as beauty, love, intrigue, or serenity - De Beers ads depicting shadowy silhouettes wearing diamond engagement rings and diamond necklaces portrayed passion and intimacy while extolling that "a diamond is forever"

Media Vehicle: TV

- cable television/direct broadcast satellite systems broadcast a multitude of channels devoted to highly segmented markets Advantages: ability to reach a wide, diverse audience; low cost per thousand; creative opportunities for demonstration; immediacy of messages; entertainment carryover; demographic selectivity with cable stations Disadvantages: short life of message; some consumer skepticism about claims; high campaign cost; little demographic selectivity with network stations; long term adviser commitments; long lead times required for production; commercial clutter

Price Fixing (legality of price)

- an agreement between two or more firms on the price they will charge for a product - found in oligopolies - collusion - illegal (Sherman Anti-Trust Act): hurts the consumers - state enforcement of unfair trade practice laws has generally been lax, however, partly because low prices benefit local consumers

Spokesperson/Testimonial

- can feature a celebrity, company official, or typical consumer making a testimonial or endorsing a product - Sheryl Crow represented Revlon's Colorist hair coloring, while Beyonce Knowles was names the new face of American Express. Dell Inc. founder Michael Dell touts his vision of the customer experience via dell in television ads

Status Quo Pricing

- charging a price identical to or very close to the competitor's price - advantage of simplicity - disadvantage is that the strategy may ignore demand or cost or both

Parity Pricing

- charging at or near what the competitors are charging - MSRP & what competition's going rate is

Product Development Process Step 4: Development

- coming up with prototype - mechanics

Persuade

- competition - sells benefits - compares - persuasive - growth/mature stage

Product Development Process Step 5: Test Marketing/Research

- conduct consumer research - limited intro of a product and a marketing program to determine the reactions of potential customers in a market situation

Musical

- conveys the message of the advertisement through song - Nike's ads depicted a marathoner's tortured feet and a surfer's thigh scarred by a shark attack while strains of Joe Cocker's "You Are So Beautiful" could be heard in the background

New to the World Products (discontinuous innovations)

- create an entirely new market - innovation/brand new - represent the smallest category of new products

Fantasy

- creates a fantasy for the viewer built around use of the product - Carmakers often use this style to let viewers fantasize about how they would feel speeding around tight corners or down long country roads in their cars

Demand Inelasticity

- demand doesn't change when prices change - not price sensitive - ex: electric - monopolies

Slice-of-Life

- depicts people in normal settings, such as at the dinner table or in their car - McDonald's often uses this style showing children eating French fries from happy meals on family outings

Who are channel intermediaries and what are their functions?

- distribution of goods takes place by means of channels, and the intermediaries are the independent groups or organizations within the channel that make the product available for consumption - act as middlemen between different members of the distribution chain, buying from one party and selling to another

Competition

- drives price down - ends up price matching (you lower your price...they lower theirs) - potential price war = we benefit - set "going rate" (external)

Innovators

- eager to try new ideas and products - first 2.5% of all those who adopt the product - first part of introduction stage (ab 3/4)

Repositioned Products

- existing products targeted at new markets or market segments

Laggards

- final 16% to adopt - they do not rely on norms - very price sensitive - tradition-bound and resist the innovation until the status quo is no longer defensible - decline stage

Step 3: Approaching the Customer and Probing Needs

- first meeting - rapport building - conduct a needs assessment

Media Vehicle: Outdoor Media

- flexible, low cost medium that may take a variety of forms - ex: billboards, skywriting, giant inflatables, mini billboards in a mall, signs in sports arenas - reaches a broad and diverse market and its therefore ideal for promoting convenience products and services Advantages: repetition; moderate cost; flexibility; geographic selectivity Disadvantages: short message; lack of demographic selectivity; high "noise" level distracting audience

Importance of Price

- generates revenue/determines optimal price - easiest to change

Direct Channel of Distribution

- has no intermediaries - goes from the manufacturer straight to the consumer - ex: producer-owned stores and factory outlets such as Sherwin Williams and Polo Ralph Lauren

A.I.D.A Model

- how do you want consumers to respond to promotion Attention: attention getter/clever Interest: look into it (details) Desire: word of mouth (brand ambassadors) Action: "buy," follow through, close deal

Advertising

- impersonal, one-way mass communication about a product of an organization that is paid for by a marketer - ex: magazine ad, newspaper ad, billboard, flyers/signage, TV

Market Share Maximization

- increase customer base - lower price but above break even - if cost is $7 and competition is $9, the price would be set at $8

Standard Mark-Up Pricing

- industry standard - MSRP - ex: jewelry stores - 200% mark up - the cost of buying the product from the producer. plus amounts for profit and for expenses not otherwise accounted for

Product Development Process Step 6: Launch/Commercialization

- intro stage of PLC - decision to market a product

Diffusion of Innovation

- labels customers - who purchases when?

Media Vehicle

- specific methods of media used by companies to deliver advertising messages to targeted customers - newspaper, magazines, radio, tv, internet, outdoor media, alternative media

Step 7: Following Up

- still managing - ensures delivery schedules are met - goods or services perform as promised

Step 1: Generate Leads

- suppliers - customers - cold calling - social media/networking (LinkedIn, Facebook) - trade shows/conventions

Public Relations

- the marketing function that evaluates public attitudes, identifies areas within the organization the public may be interested in, and executes a program of action to earn public understanding and acceptance - not paid for - networking - boost goodwill in community - restore faith in company - news release, public service announcement, film on company, event sponsorship, letter to media outlet, visit media outlet

Early Adopters

- the next 13.5% to adopt the product - rely much more on group norms and values - more oriented to the local community - more likely to be opinion leaders b/c of closer affiliation with groups - last part of introduction stage - first half of growth stage

Late Majority

- the next 34% to adopt - adopts a new product b/c most of their friends have already adopted it - risk averse - last half of maturity stage

Early Majority

- the next 34% to adopt - they weigh pros and cons before adopting a new product - likely to collect more info and evaluate more brands - last half of growth stage - first half of maturity stage

Predatory Pricing

- the practice of charging a very low price for a product with the intent of driving competitors to of business or out of a market - drive out competition (which is the goal) by setting a low price - does not hurt consumers, only the competitors - once competition is out of the market, the firm raises its prices - to prevent, the Justice Department must show that the predator explicitly tried to ruin a competitor and that the predatory price was below the predator's average variable cost

New Product Lines

- these products, which the firm has not previously offered, allow it to enter an established market - brand extension - looking for complementary products - additions to existing product lines: includes new products that supplement a firm's established line

Scientific

- uses research or scientific evidence to give a brand superiority over competitors - pain relievers like Advil, bayer, and excedrin use scientific evidence in their ads

Product Development Process Step 2: Idea Screening

- what works/what doesn't - elimination step - eliminates ideas that are inconsistent with the organization's new-product strategy or obviously inappropriate for some other reason

Demand

- willing and ability to pay - sets ceiling (market research)

Product Development Process

1. brainstorming/idea generation 2. idea screening 3. analysis 4. development 5. test market/research 6. launch/commercialization

Steps in the Personal Selling Process

1. generate leads 2. qualify the lead 3. approach 4. presentation 5. handling objectives 6. close (a.b.c) 7 follow up

This advertising 'media vehicle' has a short life, is confounded by clutter, is expensive, but does reach a wide audience with the ability to target specific demographics.

television

Supply Chain

the connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function

Product Development Process Step 1: Brainstorming/Idea Generation

new product ideas come from many sources, including customers, employees, distributors, competitors, R&D, consultants, and other experts

All of the following are considered consumer sales promotion except: a. samples b. internet banners c. coupons d. game or sweepstakes e. giveaways

b. internet banners

Role of the 'Objection' in the selling process

to make the salesperson sell the product more than what they already have (trying to convince the customer even more)

Step 6: Closing the Sale

- finalizing deal - making sale

No Customers

R+D Stag

Why do new products fail? What percent fail?

- 80-90% of products fail - why? 4 Ps issue, target was wrong, positioning (sell benefits) was wrong, no demand, competition

Pricing Strategies

- a basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle - price skimming, penetration pricing, and status quo pricing

Indirect Channel of Distribution

- a channel in which products move from the producer to the consumer through one or more other businesses - has 1 or more intermediaries - intermediaries can include wholesalers and retailers - ex: buying wood: intermediaries would be the lumber manufacturer, the furniture maker, and the retailer

Penetration Pricing

- a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market - the low price is designed to capture a large share of a substantial market, resulting in lower production costs - penetration pricing does mean lower profit per unit - tends to be effective in a price sensitive market - it typically discourages or blocks competition from entering a market

Price Skimming

- a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion - works best when there is a strong demand for a good or service - companies often use this strategy for new products when the product is perceived by the target market as having unique advantages

Personal Selling

- a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other - face to face sales - ex: retail, b2b, phone sales, remote selling

Media Vehicle: Radio

- local advertisers are the most frequent users of radio advertising - like newspapers, radio also lends itself well to cooperative advertising Advantages: low cost; immediacy of message; can be scheduled on short notice; short term advertiser commitments; entertainment carryover Disadvantages: no visual treatment; short advertising life of message; high frequency required to generate comprehension & retention; distractions from background sound; commercial clutter

Maturity Stage

- longest stage - making $, then level out - elongating the stage - product: adjusted - price: lower - promotion: selective - place: selective - a period during which sales increase at a decreasing rate

Break Even Pricing

- making enough money to just cover the costs - is cost is $7 and competition is $9, the price would be set at $7

Growth Stage

- money stage - has customer base - product: seeing changes - price: raise or lower - aggressive with promotion - place: add outlets - the second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy

Inform

- new product - new feature - new market, build awareness - "wordy" - intro/growth stage

Parity Pricing/"Going Rate" Pricing

- no way to stand out - no price war - if cost is $7 and competition is $9, the price would be set at $9

Media Vehicle: Newspaper

- one of the oldest forms of media - not the best vehicle for marketers trying to reach a very narrow market - reaches large market Advantages: geographic selectivity & flexibility, short term advertiser commitments; news value and immediacy; year round readership Disadvantages: little demographic selectivity; limited color capabilities; low pass along rate; may be expensive

Media Vehicle: Internet

- online advertising has become very versatile to target specific groups - ex: pop-up ads, banners, social media ads, pay-per-click ads Advantages: fast growing medium; ability to reach a narrow target audience; moderate cost; ability to measure ad effectiveness; ability to engage consumers through search engine marketing, social media, display advertising, and mobile marketing Disadvantages: most ad exposure relies on "click through" from display ads; measurement for social media needs much improvement; not all consumers have access to internet, and many are not using social media

Decline Stage

- phase out - product: basic, sell it off (get rid of inventory) - price: lowest its ever been - promotion: none - place: very few, discounters - a long-run drop in sales

Step 5: Handling Objections

- positive - opportunity to tell more - convince customer - managing objections by thinking ahead - don't take them personal

Break-Even Pricing

- price below MSRP - a method of determining what sales volume must be reached before total revenue equals total cost

Price Discrimination (legality of price)

- price is different for certain demographics - illegal (Robinson-Patman Act): hurts consumers - prohibits any firm from selling 2 or more different buyers - the U.S. Justice Department's enforcement of the law is vigorous

Demand Elasticity

- price sensitive/sensitive to price change - demand changes when price changes

Lower-Priced Products

- products that provide performance similar to competing brands at a lower price

Pricing Objectives/Goals

- profit maximization/skimming - market share maximization - parity pricing/"going rate" pricing - break even pricing

Shopping Bot

- program that searches the web for the best price for a particular item you wish to purchase - give pricing power to the consumer - the more info that the shopper has, the more efficient their purchase decision will be

Push Promotion

- promotes to intermediaries - manufacturer promotes to wholesaler - dealer loader (free gift, deal) - uses aggressive personal selling and trade to convince a wholesaler or a retailer to carry and sell particular merchandise

Pull Promotion

- promotes toward customer - manufacturer promotes to consumer (retailer to consumer) - stimulates consumer demand to obtain product distribution

Remind

- reminding that a brand is still there - hits subconscious - little text - mature stage

Step 2: Qualifying Leads ("Pre-Approach")

- research - willing/able to pay - who's decision maker?

Step 4: Presentation (Developing and Proposing Solutions)

- sales call - sales proposal - demonstrating product - continue rapport building

Relationship Selling

- sales technique that focuses on the interaction between the buyer and the salesperson rather than the price or details of the product - "slow dance" - sales technique based around using relationships to close sales

Online Bidding/Internet Auctions

- set parameter - seller competes on price - b2b auctions are likely to be the dominant form in the future

Profit Maximization

- sets high price - make as much money as you can - has to be reasonable - if cost is $7 and competition is $9, the price would be set at $11

Sales Promotion

- short term incentive to get you to buy - ex: sale, instant coupons, sweepstakes, contest, samples

Demonstration

- shows consumers the expected benefits - many consumer products use this technique - laundry detergent spots are famous for demonstrating how their product will clean clothes whiter and brighter

Lifestyle

- shows how well the product will fit in with the consumer's lifestyle - As his Volkswagen Jetta moves through the streets of the French Quarter, a Gen X driver inserts a techno music CD and marvels at how the rhythms of the world mimic the ambient vibe inside his vehicle

Improvements or Revisions of Existing Products (new and improved)

- some change to existing product (upgrade) - may be a significant or slight change

Health

Goal: appeals to those who are body conscious or who want to be healthy; love or romance is used often in selling cosmetics and perfumes

Fun and Pleasure

Goal: are the keys to advertising vacations, beer, amusement parks, and more

Vanity and Egotism

Goal: are used most often for expensive or conspicuous items such as cars and clothing

Fear

Goal: can center around social embarrassment, growing old, or losing one's health; because of its power, requires advertiser to exercise care in execution

Environmental and Consciousness

Goal: centers around protecting the environment and being considerate of others in the community

Admiration

Goal: frequently highlight celebrity spokespeople

Convenience

Goal: is often used for fast-food restaurants and microwave foods

Profit

Goal: lets consumers know whether the product will save them money, make them money, or keep them from losing money

What happens with the promotional mix in each stage of the PLC?

R&D: preintro publicity; small amounts of advertising Intro: heavy advertising and pr to build awareness; sales promo to induce trial; personal selling to obtain distribution Growth: heavy advertising and pr to build brand loyalty; decreasing use of sales promo; personal selling to maintain distribution Mature: advertising slightly decreased - more persuasive and reminder in nature; increased use of sales promo to build market share; personal selling to maintain distribution Decline: advertising and pr drastically decreased; sales promo and personal selling maintained at low levels

Product Life Cycle

R+D/product development, intro, growth, maturity, decline

Humorous

advertisers often use humor in their ads, such as Snickers' "Not going anywhere for a while" campaign featuring hundreds of souls waiting, sometimes impatiently, to get to heaven

Which tool of the promotional mix is described as a paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor?

advertising

Elements of the Promotional Mix

advertising, sales promotions, public relations, personal selling, direct marketing

Connect

by facilitating an exchange of information through a transparent process, brands are increasingly connecting with their customers in hopes they become brand advocates that promote the brand through their own social networks

Goals of Promotion

informing, persuading, reminding, connecting

Advertising Appeals

profit, health, fear, admiration, convenience, fun and pleasure, vanity and egotism, and environmental consciousness

Which tool of the promotional mix consists of a direct inducement or short term incentive to generate quick store traffic and add value to encourage an immediate purchase?

sales promotion

Cost

sets floor (internal)

Advertising Styles of Execution

slice of life, lifestyle, spokesperson/testimonial, fantasy, humorous, real/animated product symbols, mood or image, demonstration, musical, and scientific